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Thursday, September 1, 2011

Fit and Right

The business sector is up in arms against the NREB, the National Renewable Energy Board, particularly against its proposed FIT.

“FIT” is the “feed in tariff,” the list of rates that we have to pay for what is known as “renewable energy”—the electricity generated from solar and wind power, for instance.

The Renewable Energy Law (RA 9513), which Congress enacted in 2009, requires our government to develop sources of renewable energy, mainly by giving away billions of pesos worth of incentives to investors—all of them foreign groups.

Guess who must pay for those costly “incentives.” Well, it is actually everybody who uses electricity, meaning all households and the entire business sector. Meaning, ultimately, you and me!

That is because the “incentives” come in the form of high power rates—much higher than what we pay for electricity generated from hydro, natural gas or coal power plants.

For solar power, the NREB wants the “incentives” (i.e. the cost to consumers) to be almost P18 per kilowatt-hour (kwh), which is about three times the cost of electricity from hydropower plants.

Business chambers are thus howling against such “generous” rates.

Talk in business is that the NREB seems to be pushing hard for a particular form of renewable energy, which is none other than solar. And everybody is wondering why.

Under the law, we have to pay for the high rates for solar power, the one known as FIT, for up to 12 years. Lo and behold, the munificent NREB wants to extend it to 20 years.

In other words, this is the expensive take-or-pay system all over again, something that we had to suffer starting in the power shortage in the 1990s, which we still have to endure up to now.

In effect, the business sector is asking the NREB why can it not just support the less costly forms of renewable energy, such as hydro and biomass, precisely to lessen the impact on consumers. Yes, why?

It is not as if this country, where more than 40 million people are poor, must catch up with the rest of the world to save the environment, even if we can afford it.

The last time I checked, in this country, we are already using renewable energy up to 32 percent of our total energy mix versus only 10 percent in the United States.

The NREB does not that think that 20 years of charitable FIT of P18 per kwh for solar power are rather long, too long in fact.

Again, the question is why does the NREB favor solar power. Let me see, could it because some foreign groups are planning to go into solar power generation, instead of the cheaper hydro, for instance?

Word goes around that they are lobbying for the “right” FIT—i.e. high power rates for all of us.

* * *

Perhaps it is too late for business groups to throw their support behind Customs Commissioner Angelito Alvarez, now that our leader Benigno Simeon (a.k.a. BS) already talked to the media that Alvarez is on the way out.

From what I gathered, the PCCI and FPI—or the Philippine Chamber of Commerce and Industry and the Federation of Philippine Industries, which are the main business groups actively fighting technical smuggling—have expressed their concern, officially, regarding the ouster of Alvarez from BoC.

Apparently the PCCI and FPI know something more than a lot of people in the Palace: business thinks of Alvarez as a strong ally in their campaign against smuggling.

Do you think that the business groups are still hoping against hope that BS would change his mind and retain Alvarez?

For one, BS only talked to media about the removal of Alvarez from the BoC. From all indications, BS did not even talk to Alvarez.

Actually, Alvarez is not a BS boy. I mean, BS does not know Alvarez personally, at least not in the same manner, for instance, as LTO chief Virginia Torres or Local Government Undersecretary Rico Puno, who both figured in controversies earlier on in the Aquino (Part II) administration, but who both stayed in their positions, thanks to the hard play by BS.

But is it possible at all that the President of the Republic does not bother to talk to his own people, not even to an official whose position is as critical as the head of the BoC, the second-biggest revenue earner of the government? Obviously, yes!

Alvarez became BoC head as a handpicked man by Finance Secretary Cesar Purisima. In their younger days, Alvarez and Purisima worked together in SGV. Alvarez in fact was Purisima’s boss in the large audit and consultancy firm.

Being a seasoned auditor perhaps served Alvarez well in his job at the BoC. It was during his time that the bureau uncovered the “transshipment” modus operandi for smuggling and established the paper trail to file smuggling charges against big companies, including the P26-billion smuggling case against Pilipinas Shell.

If there is something that BS can fault Alvarez for, it is the poor performance of the BoC in the past seven months in its collections. And that is it.

All the critics of Alvarez, including loudmouth but ignorant clerics, or even politicos with vested interests, have it all wrong in pinning issues on Alvarez like the Mindanao vehicle smuggling cases or the transshipment modus operandi. They happened well before his time!

At least the local car companies are happy with the move of Alvarez against the alleged smuggled cars from the Subic free port. He ordered an audit of the 3,000 plus cars that entered Subic from abroad in the past couple of years. Guess what—involved in the case was somebody identified with a politico in the Subic area.

Like it or not, the BoC is a juicy position, and people around BS covet the position of Alvarez. All the boys around BS, inside or outside the Palace, certainly have their own protégées for the position.

Let us just hope that this weird case concerning Alvarez does not send the wrong signals to the business community that, even if a government official is doing his job well, BS can throw him out just like that, simply because BS does not know him personally.

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FEF is a public advocacy organization dedicated to advancing the cause of economic and political liberty, good governance, secure and well-defined property rights, and market oriented reforms. It counts among its members former and present Cabinet secretaries and undersecretaries, leading figures in the academe, respected media personalities and opinion makers, and prominent members in the business and finance community.